Select Committee on Social Security Minutes of Evidence

Examination of Witnesses (Questions 120 - 140)



  120. One last question, a factual one. You have raised a question mark about the proportion of mothers who will be better off as a result of the changes because of the falling numbers on income support and you also raise this point about the trade-off between housing benefit and Working Families Tax Credit on the maintenance disregard. Have you got any idea about what your own estimate would be of the numbers who would be better off if you are not accepting the figures produced by the Government?
  (Ms Garnham) We have based our judgment on figures that came out last year in response to the Green Paper when there was a parliamentary answer which estimated that something like 90,000 parents with care would get decreased assessments as a result of the new formula. The majority of them, about 74 per cent of them, had assessments that were between £30 and £80. So, in other words, they tended to be the higher assessments that were being reduced, possibly the better off non-resident parents who were seeing the reduction. On that parliamentary answer it was said that half of those losing out received Family Credit, so they would have been protected to some extent. We are partially relieved in that Working Families Tax Credit will go up to a higher level of income, so that may be a higher proportion in future, but we have not yet got the figures we need to get that information out. There is some comfort there but there is still a concern about those who do not get any protection from benefits. For example, at the moment in the current child support statistics there are something like 250,000 parents with care who receive assessments above £30 which will be the new average and about half of those are not receiving benefits. Again, more of them might be drawn into the Working Families Tax Credit but some of them will be left vulnerable to reductions in maintenance payments. That is something that we are watching very closely.

Mr Dismore

  121. Could I ask you about section 7[9] in your paper on shared care. I think the message there, as I read it, is that you do not agree with reducing it for the contribution that the father may make by looking after the child one or two days a week or whatever. Perhaps you could expand on that. In answering that perhaps you can say what level or what threshold there should be before there is some sort of disregard for the father's contribution?
  (Ms Sherlock) Certainly. Obviously the people we represent are the parents with care and that is our job, whether they are mums or dads. Our concern, as we said in our submission, is simply that when lone parents talk to us they say that if, for example, their son or daughter goes to spend one or two nights a week with the dad that their costs just do not drop by two-sevenths because, of course, the parent who is the main carer still has to buy all the unglamorous things that nobody sees, they pay for the school clothes, the school books and equipment, the household bills and they are still paying most of the costs doing that. We are concerned that simply a pro rata reduction does not reflect that. One has to be aware that most lone parents are poor and these are very small sums of money. You really just about get enough money to keep a household together anyway, if you start to reduce that at all then that causes a problem. You asked me at what point would I be willing to see it reduced. I would like to see a separation between contact and money in the first place because I think they are two different things. My worry is that I think if Government is particularly committed to providing shared care, and I would back it in so doing, I think shared care is important for the children, it is a good thing to promote, I think the benefits system ought to pick it up. I would rather see, for example, the non-resident parent being able to claim housing benefit for a house big enough to have a bedroom for the children to go and stay in, otherwise what we end up with is a family living on a small amount of money and when it splits if you try to run two houses out of that small sum of money both big enough to be family homes you are simply not going to have a viable family unit. There is simply not enough money kicking around, the cake just is not big enough. Frankly, if we want to make that a reality for the future that is going to cost more money. Just trying to make the parent with care manage on less is not the answer.

  122. Can I ask you about section 6[10] and the minimum payment of £5 a week which you cast doubt upon in relation to income support cases. I am not quite sure of the logic of what you say in paragraph 6.2[11] where I think what you are saying is that if the non-resident parent is on income support they should not pay anything but then you go on to say we should still give the parent with care an extra £10 that guarantees the advantage of applying child maintenance. Presumably if the parent with care knows that the other parent is on income support then you are creating a circle of no advantage to anybody whatsoever other than effectively increasing the benefit bill by £10 a week.
  (Ms Sherlock) You could do two things. Normally our priority is to maximise the income to the parent with care but because we ourselves have objected, for example, to the benefit penalty for those lone parents who do not co-operate on the grounds that you are then asking a family to live below income support levels, which are supposed to be the minimum on which anyone should survive, it would seem inconsistent for us to accept that the same thing can be done to a non-resident parent. I accept the benefit bill may have to absorb this but if we are going to ask a non-resident parent to contribute to what is supposed to be the minimum income on which someone can survive then I think his benefit payment should be increased to acknowledge that. We are back to the same point, that it costs more money to run two families than it costs to run one family. I do not think there is any way around that. That is what we are trying to get at, badly expressed I know.

  123. The point I am making is there is no point in going through the whole rigmarole if it is clear that both parties are on income support. That is the logical explanation.
  (Ms Sherlock) Except that some money will always change hands and, of course, situations change. Even if you are making a £5 payment to him and he is making the payment across to her, that establishes payment for a start, it establishes responsibility, and it gets payments in place which will change as one or other party moves off income support. I think it is worth doing anyway. It may sound like a painful exercise but people's lives do changes and I think the importance of establishing responsibility at an early stage is still crucial.

  124. So what you are saying is his benefit should be increased by £5?
  (Ms Sherlock) That would be one solution.

  125. It is just deducted at source and then paid over automatically?
  (Ms Sherlock) Yes. However notional that might be there would not be any costs if you do that. Otherwise he is having to pay it out of what is supposed to be the minimum amount on which an adult can survive and that would seem irrational and unreasonable.

Miss Kirkbride

  126. Going back to what you said about absent parents being given extra benefit to hand over and also to what you said about shared care and housing costs, do you not think it is unfair to the taxpayer and particularly to the low income families who have two parents in the household who will be paying extra tax to pay for divorce where both parents have houses big enough to accommodate families?
  (Ms Sherlock) I can understand that the taxpayer might feel reluctant but my priority is the children. What I do not want to see is reforms happening in such a way that either parent is impoverished to an extent that they cannot provide adequately for their children. I think that the proposals for shared care, if taken to their logical extent, would impoverish families to an unreasonable extent. What I said was if the Government placed a priority on promoting shared care then that could only happen if they found a solution to the housing problem and one way to do it would be to enable non-resident parents to have houses big enough to be able to receive their children. I think that is a judgment for the Government, it is about priorities. Given the demand for housing stock, not just housing benefits, I can understand that there are competing demands for that. In the end our concern is with the children. If the Government does not wish to pursue that we accept that, but I think it should then not pursue taking shared care to the ultimate either because it would then impoverish the children.
  (Ms Garnham) It is also important to see child maintenance as part of the wider child support package which includes things like child benefit and other benefits and services. So the ultimate aim is that children are supported from whatever source. There may be some implication for the taxpayer in addition to child maintenance, not every family will have regular or even high amounts of child maintenance, so you have to see it as a broader child support package.

  127. Given that it is your policy, whether or not the Government chooses to opt for it, actually creating a system where divorced parents have access to a big enough house to look after the children of that relationship is very, very expensive, not just in housing benefit terms but also the supply of low cost housing. We see it every day, there are not enough houses in my constituency for families already, let alone to have effectively what is a single person living for most of the week in a house large enough to accommodate a family who would be desperate to have it.
  (Ms Sherlock) With respect, Chairman, I must have expressed myself poorly. It is not, in fact, our policy to promote that. We are saying that if A is done B must be done also. Our view is that if the Government feels strongly enough about shared care for children, and it appears that is one of the issues that they promote in the White Paper, then to us one of the logical consequences of that must be a willingness to invest in steps necessary to enable shared care. If that is not felt to be a national priority, and I can understand the argument that it is not, and I completely take the point you are making, the consequence is that one must then promote forms of contact other than residential shared care.

  128. What do you think that ought to be?
  (Ms Sherlock) If we are going off the point here, I would go back to what the Lord Chancellor's Department is going to do about the processes for relationships and marriages that break down. For me, it is really about trying to assist couples in the breakdown of relationships in such a way that the relationship can benefit the child as best it can. Obviously when relationships break down, things get difficult, but to me the priority would be helping couples to try to manage the process of breakdown in as positive a way as possible for the children because frankly if the parents can talk to each other, they will sort contact out; they always do. It is where they cannot, they break down and the state tries to take over that the problems set in, so to me that would be the priority.

  129. Somewhat on this line of what the behavioural impact would be if you introduced some of the changes you are suggesting, the benefit penalty, whilst being harsh, if we were to do what you are proposing to do which is not to have one, then certainly I have received circumstantial evidence when I have had discussions with people about the CSA where there would be a huge temptation to come to an agreement with the absent parent which is more financially attractive to both the absent parent and the parent with care, leaving out the CSA for whom there would then be no penalty by leaving them out, and again it is very unfair to the taxpayer because the taxpayer ought to be able to expect that some of the bill for looking after children should be paid for by the parent and if you have this system, then there will be a huge attraction to cut a deal without involving the taxpayer.
  (Ms Sherlock) To be honest, in those circumstances if a lone parent on income support cut a deal with the father and was receiving money and not declaring it, that is fraud and that is a whole different question. Certainly we are talking about a completely legal decision to choose not to co-operate because the lone parent feels it is not in the best interests of the children because, as they say to us, it has jeopardised the relationship so badly with the non-resident parent that the non-resident parent threatens not to see the children and it causes the relationship within the family to break down so fundamentally that they feel they cannot deal with the consequences. That is a completely different question from whether money is actually changing hands and not being declared and if it is, I think that is fraud and it should be tackled and I am wholly opposed to any benefit fraud and defrauding of the taxpayer, but I think that is a different question.

  130. I do not think it is reality though from where we are standing inasmuch as you might actually attract more violence to the parent with care if the father says, "Look, I could do so much better if you just take £20 off me rather than have the CSA come along which is going to take double or triple that amount", and there will be huge pressure on the parent with care given that there will be an incentive in the system to legally not co-operate, but to accept a bit on the side from the absent parent.
  (Ms Sherlock) I think part of our difference is that we just have to go on what has happened. Under a system where there was absolutely no incentive to co-operate and a penalty not to co-operate, lone parents did not co-operate, so we have tried going out with the big stick and saying, "Well, you'll get nothing for co-operating, but we will penalise you heavily for non-co-operation", and still they did not do it. Now, I think a lot of that is about the attitude to the CSA. Logically when the Agency was created, it ought to have been, if you like, non-resident parents who objected because it would cost them money and parents with care who would have been delighted and they were, they were delighted it was being created, but a few years down the road they were coming to us and saying, "I am sorry, I don't care if you give me £100 a week, but I cannot stand the impact the Agency has had on my life and our children and we just can't handle it", and they are willing to accept whatever penalty to do it and that is certainly the anecdotal evidence coming to us. It is not, "He is slipping me 50 quid not to co-operate", but it is actually, "We simply can't deal with the consequences". Now, in our view, we have got a chance to completely wipe the slate clean and persuade parents with care again that it is in their interests for the Agency to work. The Government, in my view, is doing a lot of very, very good things; it is giving an incentive to parents on income support and on Working Families Tax Credit to co-operate by making sure some of the money reaches their kids for whom it is intended. It is actually trying to change the entire culture and in that context I would rather see the carrot waved around and given a chance before the stick is brought in and that is all we are saying.

  131. You have done some work on what happens in other countries and the guarantee that states give to provide the maintenance and then collect it from the absent parent. I just wonder how that really compares because given that the Government's argument all along has been that this would be too costly, we are led to believe that there are a great number more single parents in Britain than there are abroad and I just wonder whether you could give us an idea of that and how much more of a liability it would be to the British taxpayer if we were to offer a guarantee like that which is offered on the Continent.
  (Ms Garnham) Lone parent rates vary across Europe. Places like Sweden and Denmark are very similar to us and UK rates are below the United States. In some other European countries the proportion of families headed by lone parents is slightly lower. I do not know what the costs to those countries are, but what I do know is that they each have a different regime and some of them involve passing over a minimum payment but in most cases they have lower rates of child maintenance in the first place so they are dealing with lower levels. So we are moving to a position where we would be likely to be able to implement something similar here.

Dr Naysmith

  132. In your written evidence you highlight some of the fears you have about the decision-making procedure and the appeals procedure, like the three-stage business that is going to be part of it, and also in particular you say that the appeals will shadow the tribunal service in that there will only be one person here as opposed to three and you say that this is particularly important in terms of child support and the cases we are talking about. Why do you think that is the case?
  (Ms Garnham) Well, the new regulations on tribunals will provide a three-person tribunal if it is a case that concerns money issues, so, therefore, some of the issues that we are most concerned about, for example, to do with good cause and the benefit penalty would not necessarily have a full tribunal and, therefore, there is much less likelihood that you will have another person on the tribunal who reflects the gender of the person who is appealing and you would not have the opportunity of other people's views and life experiences being brought to bear on the matter. The possibility is that you could just have a single person and in most cases, as most lone parents are female, a male tribunal chair on his own considering questions of domestic violence or emotional difficulties in the family. That might be fine, but the chances are that it is not going to be very comfortable and we do not think it is desirable.

  133. So you really would be criticising the whole idea of one-person tribunals?
  (Ms Garnham) Our recommendation is that a three-person tribunal should be made available for those cases we are worried about.

  134. Presumably the Government would argue that one of the advantages of such a system is that it would speed up the resolution of disputes and so on and it is certainly true that currently in the CSA things can go on for a very long time, but obviously you think that is not worth having if it is going to result in unfair decisions?
  (Ms Sherlock) Obviously anything that speeded up any CSA decision we welcome in general. We would like to think that the new system would be far more transparent and, therefore, there will be fewer disputes arising certainly about assessments themselves, although there will obviously be some still. We certainly think that there are some issues which are fundamental and for the protection of vulnerable, lone parents, they should have the option if they wish to appear before a three-person tribunal if they feel that is the best thing for them in the circumstances.

Ms Buck

  135. We heard from Anne Parker, the Independent Case Examiner, yesterday some anxiety that she had about the discretion element that was being introduced and you yourself mention in paragraphs 11.1 and 11.2[12] the need for both quite limited criteria for departures and for that to be specifically defined and effectively to limit the level of discretion. Baroness Hollis, in her evidence, I think was stating that this would be done in regulations and because of that, that is the trap in the sense that most of us fell into before and I wonder if you could just say a little bit about it. You have stated the warning about it, but what have you got in your mind about how that might work and how the departures could be managed effectively?

  (Ms Sherlock) It is really a matter almost of principle. As you rightly point out, the first time when the Agency was created, fairness was the priority and so an attempt was made to create a system which would as far as possible reflect an individual's particular combination of circumstances. Now, that of course resulted in something that was totally unenforceable and so having taken the decision to move to a much more simplified system, we are concerned that you take the decision and then you can keep making cases of individual circumstances and you simply start piling back on top layers that you have just stripped away, so you in fact defeat the purpose. Frankly, going for a percentage system is rough justice and there is no way around that, but a decision has been taken that in the interests of money actually getting to the people who need it most, a system must be found that is simple and straightforward and I think if you are going to take that route, then that is the route that you have to stay with and you need to be careful not to erode the only advantage of the system which is simplicity.

  136. I agree with you, but I am not sure what that means because the devil is going to be in the detail of regulation and you say that is clearly defined.
  (Ms Sherlock) Specifically we mean that we think a departure should be limited to costs relating to child contact, not to the children themselves, not to the circumstances of the individual because once you start to take into account, "Well, this guy has got a big house and this guy has got to run a car because he is out at night", every family has its own particular combination of circumstances. If there are costs relating to the children or child contact specifically then I think they should be taken into account otherwise I think you simply have to draw a line in the sand and say "this far but no further".

  137. You put that into the context we heard yesterday, that because the whole thing is based on conflict by definition you have to step outside that and accept the fact that there is going to be a conflict between the parents, and that is part of why we are here, and any complex system of allowing for departures and variations will be just too unreasonable.
  (Ms Sherlock) I think it will simply defeat the object. The one thing we have found out already is there is no point in having a system that is great on paper if the money does not actually change hands. The purpose of the Agency is to pay money from the non-resident parents to the parents and that has to be the yardstick by which it is judged.

Mr Leigh

  138. You spend a lot of your time—I understand it from your point of view—asking the general taxpayer to chip in more money, but what about the two-thirds of absent parents who ten years after the foundation of the CSA do not pay anything for their children? Why do you not spend more time attacking that problem and advising us and the Government how we can get these fathers, it is usually fathers who pay nothing, to pay something?
  (Ms Sherlock) Mr Leigh, I shall in future send you copies of my speeches. I have very strong clear advice for you: move the CSA into the Inland Revenue, apply just as much energy to compliance as you do to assessments and you may start to see money changing hands.

  139. Do you honestly think that the Inland Revenue could make a huge difference to you in relation to these two-thirds?
  (Ms Sherlock) Yes, I do. Presumably those recalcitrant fathers pay their taxes so why should they not pay their child support?


  140. I am conscious that all of our witnesses are beginning to fall into the trap of assuming that the White Paper is a decided fact but there is a small matter of parliamentary legislation. I do not say that in any way critically but I think it is as well to remember that Parliament is still looking at the detail of this and that is why we are here. Your contribution this morning has aided us in our contemplation of the recommendations that we shall make in consideration of the legislative process. Thank you very much for the work you have done and for your appearance this morning.
  (Ms Sherlock) Thank you for the opportunity.

9   See Ev p 34. Back

10   See Ev p 34. Back

11   See Ev p 34. Back

12   See Ev. p. 36. Back

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